Buying Your First Home in Australia

Understanding the Australian property market

The Australian property market is highly regional. National headline figures hide huge differences between Sydney, Melbourne, Brisbane, Perth, Adelaide and the regional markets — and even bigger differences between suburbs within a single city. Capital growth, rental yields and price-to-income ratios can all vary by a factor of two or more across markets that look similar on a map.

Long-term, residential property in Australia has produced compound annual growth of roughly 5–7% across most capital cities, but inside any 10-year window you'll see flat years, double-digit years and outright falls. Plan around the long-term average, but expect the year-to-year ride to be bumpy.

Three factors do most of the heavy lifting for long-term growth: population and migration trends, the supply of new housing in your target area, and household borrowing capacity (which is mostly set by interest rates and wage growth). Pay more attention to these than to monthly auction clearance rates or weekly headlines.

How much deposit you actually need

Most lenders prefer a 20% deposit so they can avoid charging Lenders Mortgage Insurance (LMI). On a $750,000 home, that's $150,000 — plus another $30,000–$50,000 for stamp duty, conveyancing, building and pest inspections, loan fees and moving costs, depending on the state.

First home buyers can usually get into the market with as little as 5% deposit, but you'll pay LMI (often $10,000–$25,000) unless you qualify for a government scheme such as the Home Guarantee Scheme, which lets eligible buyers purchase with a 5% deposit and no LMI.

A good rule of thumb: total deposit + costs should be enough that your repayments stay below 30% of your gross household income at a stress-tested rate (usually current rate + 3%). If they don't, save more or look at cheaper suburbs before you stretch.

First Home Owner Grants & schemes

The First Home Owner Grant (FHOG) is a one-off cash payment from your state or territory government, only available on new or substantially renovated homes. Amounts range from $10,000 to $30,000 depending on the state, with price caps that change regularly — check your state revenue office for current figures.

Stamp duty concessions are usually worth more than the grant itself. Most states offer full stamp duty exemptions for first home buyers up to a price cap (often $600,000–$800,000) and partial concessions above that, which can save $15,000–$40,000 on a typical purchase.

Federal schemes work alongside state ones. The First Home Guarantee, Regional First Home Buyer Guarantee and Family Home Guarantee all let eligible buyers purchase with as little as 2–5% deposit without paying LMI. The First Home Super Saver Scheme lets you save your deposit inside super at a lower tax rate.

The buying process step by step

Step 1 — Get pre-approval. A lender will assess your income, expenses and deposit and tell you roughly how much they're willing to lend. Pre-approval is usually valid for 3 months and lets you bid or make offers with confidence.

Step 2 — Inspect and research. Visit properties, check recent sale prices for the street and suburb, read the section 32 / contract of sale, and arrange building, pest and (for apartments) strata inspections before you commit.

Step 3 — Make an offer or bid at auction. Private sale offers can be negotiated and are conditional on finance and inspections. Auction purchases are unconditional once the hammer falls — only bid at auction if your finance and inspections are already sorted.

Step 4 — Sign, pay deposit, settle. After the contract is signed you'll typically pay a 10% deposit, then settle 30–90 days later when the balance is paid and the title transfers to you. A conveyancer or solicitor handles the legal side.

Common mistakes to avoid

Stretching to the absolute maximum a bank will lend. Banks assess your borrowing power on today's rates and your current expenses — they don't know you want kids, a renovation, or a career change. Borrow what's comfortable, not what's possible.

Forgetting the cost of ownership. Beyond the mortgage there's council rates, water, insurance, body corporate (for apartments), maintenance and the occasional big-ticket repair. Budget around 1–1.5% of the property value per year for ongoing costs.

Buying for capital growth in a suburb you don't understand. The best long-term performing suburbs aren't always the cheapest or the most exciting. Stick to areas with strong owner-occupier demand, infrastructure investment and tight new-supply pipelines.

Skipping the building and pest inspection to save $500. A missed structural issue or termite problem can cost tens of thousands to repair. Always inspect.